-KANSAS CITY, MISSOURI, US — With the fall US corn and soybean harvests all but complete and winter wheat planted, the trade’s focus shifts to supply and demand of those commodities amid uncertainty because of a new US administration, escalating war in the Black Sea region, consumer demand and weather, among other challenges.
While weather and supply-and-demand fundamentals always are top of mind in the grain, oilseed and edible oils markets, the US political climate was front and center among most market analysts recently interviewed by Milling & Baking News, a sister publication of World Grain. The impact of potential tariffs “promised” by president-elect Donald Trump, possible shifts in energy policy that could impact grain demand for biofuels, and the surge in the value of the US dollar, which makes US exports more expensive, after the election are and will be at play in the commodity markets in the months ahead.
Focus on exports, policy
With the dryness concerns that dominated wheat industry chatter early this fall mostly alleviated by November rains, focus has shifted to geopolitical and economic matters. Dryness during winter wheat planting sparked concern that a lack of topsoil moisture could inhibit emergence and pre-dormancy development. The US Department of Agriculture on Oct. 28 rated the 2025 winter wheat crop’s condition the second worst since national data began in 1986. The dry spell broke shortly thereafter, and by Nov. 17 the Department had upgraded its assessment to 49% good-to-excellent in the 18 principal winter wheat production states from 38% six weeks earlier as the crop’s initial rating. Conditions were less encouraging in the northern Plains.
“Montana, western North Dakota is different and there is a problem up there on the winter wheat,” said Mike O’Dea, risk management consultant, StoneX, Kansas City. “But elsewhere, we should have a good crop going. With all this rain and snow the last couple of weeks as we start to cool this thing off, we’re set up really well to go into the spring right now in my opinion. Soft wheat looks really good. Central states have had plenty of rain and the Drought Monitor’s pretty much moved them out of the drought situation. We think soft wheat acres will be up 5% or 6% new crop plantings. Hard red winter probably up 1% or 2%.”
As the rains fell, the USDA released its November World Agricultural Supply and Demand Estimates (WASDE) report with few surprises, estimating the June 1, 2025, US wheat carryout at 815 million bushels, up 3 million bushels from the October projection on a 5-million-bushel import increase partly offset by a 2-million-bushel food use increase. US wheat exports were left unchanged at 825 million bushels. Global wheat exports were lowered 1.15 million tonnes, to 214.67 million tonnes, and top global exporter Russia’s wheat exports were left unchanged at 48 million tonnes.
“USDA will have to increase US wheat exports in the next couple of reports, probably by 20 million to 25 million bushels, but it’ll probably be spring or white wheat, and hard winter wheat continues to lag,” O’Dea said. “The Russian balance sheet to me is still off 5 million to 6 million tonnes on carry-in, so their data is kind of skewing how people think about the global wheat picture, and it also explains why prices are staying under pressure. There is more Russian wheat there than is on paper.”
Steve Freed, Freed Consulting, Chicago, Illinois, US, said the outlook for US wheat exports — uncompetitive globally but commitments are ahead of last year — is complicated. The tariffs Trump indicated he’ll pursue had counter-effects for US agricultural exports during his first term, but commodity prices (including grain) were lower then. Plus, recent demand for US wheat has pulled back amid a stronger dollar and an export business battle between Eastern Europe and the Black Sea region.
“There might be a little demand for spring wheat, but that won’t necessarily move the needle,” Freed said. “Everything kind of came at the same time: the higher dollar, the rains, the hard wheat farmer selling cash after the rain, the unexpectedly one-sided election result. Just go down the list.
“Then the price of corn is too high and the price of soybeans, at least under Trump’s previous administration, is way too high. And then all these tariffs.”
Freed said tariffs the president-elect is planning would affect the top US corn buyer, Mexico, and curtail soybean sales to China.
“Through at least the first quarter 2025, assuming big South American corn and soybean crops, those prices have to come down, and wheat has to come down with it as relationship,” he said. “Then you start a whole new crop here in the US. La Niña’s good, and if we actually have a La Niña, you’ll have record corn and soybean yields, and you might even have record wheat yields even though the acres might be down a little bit.”
Lower prices for wheat buyers were likely to last two years, Freed said, barring unknowns such as Russia limiting exports.
“Their (Russia’s) supply is tight and their crop is down,” Freed said. “If they still want money, they’ll export that wheat; they’ll let their people starve.”
Standing out to O’Dea was a wheat-corn spread that dropped 50¢ a bushel over the first half of November.
“We’re selling soft white off the Pacific Northwest as feed wheat into the Asian market, I think mainly into South Korea, and I think three or four cargoes have been sold,” O’Dea said. “Moving the wheat-corn spread has put global wheat values back into the feed mix. I’ve seen a little more interest in the US on hard wheat in Texas. There’s actually some hard wheat feeding now, which it shouldn’t be, not this time of year, which tells me wheat prices are too cheap versus corn right now.”
The calculus for bakers and other flour buyers was simple nearby: Go hand-to-mouth while there were carries in the market. For buyers without that level of flexibility, “buy the spring,” said O’Dea.
“We’ve seen a lot of pricing get done on this (Nov. 6-14 wheat futures) break,” he said. “Hopefully futures can hold the recent lows, but we’re just stuck in rangebound, not going anywhere. I think hard wheat basis is going to firm up just because of the drop in flat price. The seasonal demand will pick up, so basis values ought to continue to firm up on hard red winter. Spring wheat, the 15% proteins have come down, the 13% proteins have come up, 14% proteins are steady and probably will stay steady. We’re a little friendly hard wheat basis.”
Wheat futures could take a rangebound roller coaster over the first half of 2025, Freed said, suggesting 20¢-a-bushel declines across the contracts followed by “some kind of premium back in thinking that happy days are here again, the consumer starts buying, there’s a lot of restrictions on imported goods. Wheat goes back to where we are today and then adds another 20¢. So, 20¢ lower in the first half 2025, comes back to unchanged, 20¢ higher the second half.”
To Freed, the baker “today is more worried about the brand because there may be 40% of what he’s making that the consumer’s not buying. Does he shut that plant down, focus on what is selling? Capital costs should be coming down, which helps. But wages are going up much quicker, and that’s going to hurt. Do you pass on the higher wages to the consumer who is saying ‘enough is enough, I’m not going to buy your product.’ Wages are going to keep going up. If I’m sitting here as a CEO, I don’t have to worry about what I’m buying. Cocoa has come down, sugar has come down, coffee has come down, all commodities will come down under Trump. But then on this side of the ledger, I may have to lay off 10% of my staff and shut a plant down.”
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Market uncertainty swirls
Like other agricultural commodities, uncertainty is wreaking havoc on the US soybean market. Typically, autumn is a time of market stabilization, with freshly combined US crops in the bin and planting well underway in South America, generally a time of bringing the market outlook into focus. But an extra dose of volatility was added to the mix after the USDA severely cut its yield projections for the domestic 2024 soybean crop.
In its Nov. 8 Crop Production report, the USDA slashed the 2024 US soybean yield estimate by 1.4 bushels, to 51.7 bushels per acre, down from its forecast of 53.1 bushels per acre just one month prior. Pre-report trade expectations ranged from 52 to 53.8 bushels per acre.
“This was one of the biggest misses in history versus trade estimates,” said Erin Nazetta, director of food and agriculture research at Broadview Group Holdings, LLC. “Some of the other bigger miss years are 2020 and 2018, but neither of those were off by over 1 bu per acre like this year.”
Along with the lower yield, the USDA also sharply cut its outlook for 2024 soybean production, dropping its current forecast again below the range of trade expectations to 4.461 billion bushels, down 2.6% from 4.582 billion bushels in October, and ultimately erasing previous projections for this year’s domestic soybean output to establish a new all-time high, surpassing the previous record of 4.465 billion bushels in 2021.
But despite the surprising cuts, which typically would solicit a bullish response, the nearby CME Group soybean contract only settled 1¼¢ higher on the day the USDA data were released.
“On report day, general prices did not fully react with how you would expect them to with this type of supply miss,” Nazetta said. “The overall crop size, even if it came 100 million bushels below what the market was expecting, that still is going to be near a record high crop for the US.”
She also noted the USDA projected the Sept. 1, 2025, carryover of soybeans at 470 million bushels, 80 million bushels below the October outlook but still the highest projected carryout in the last five years, which likely provided some offsetting pressure.
While showing minimal movement following the USDA report releases, CME Group soybean futures had jumped more than 3% for the week ended Nov. 8, with soybean oil futures soaring 6% by the week’s end. Undoubtedly, the results of the Nov. 6 election were the biggest market mover for the week, as the affirmation of the forthcoming Trump administration and its promises for multiple policy shake ups sent a sting of uncertainty rippling through the soy complex.
“The biggest uncertainty is, how are the tariffs going to play out?” Nazetta said.
During the presidential campaign, Trump pledged to impose an additional 60% tariff on Chinese imports and a 10% to 20% tariff on imported goods from other countries. The rhetoric rekindled recollections of the first Trump administration’s trade war with China, the world’s top importer of many agricultural commodities, including US soybeans.
In 2018, then-President Trump imposed a series of tariffs on more than $30 billion worth of Chinese products that prompted multiple retaliatory Chinese tariffs against US imports, specifically of US agricultural products. The US soybean market was considerably impacted during the 2018 trade war. Total soybean exports from the United States dropped 18% from 2.13 billion bushels in 2017-18 to 1.75 billion bushels in 2018-19, with US soybean exports to China dropping about 70%. The price of soybeans tumbled $2 per bushel, and the total loss to US agriculture during this period was more than $27 billion, with soybeans accounting for 71% of those annualized losses. During that time, China began massively importing soybeans and other agricultural goods from Brazil, which helped cement that nation’s status as an agricultural powerhouse, where it remains today.
Since then, trade relations between China and the United States have improved, thanks to negotiations that began in the first Trump administration and were carried through the Biden administration, and China began importing US soybeans at pre-trade war levels. But the relationship remains rocky as China continues to circumvent its trade agreement. Meanwhile, Brazil remains the top supplier of soybeans to the world’s leading buyer, siphoning more export volume each year from the United States.
“Our exports of soybeans are OK this year, but they’re not great,” said Stephen Nicholson, executive vice president, global sector strategist-grains and oilseeds for Rabobank, during a recent fall harvest outlook webinar. “This is something we have to be wary of as we go forward these next four years as Mr. Trump has talked very clearly about putting more tariffs on. And our analysts in China have been very clear that China will retaliate if the US does something specifically toward China versus other countries.”
Also, concerns about domestic policies under the forthcoming Trump administration, especially for soybean oil usage, have market analysts juggling a barrage of outcomes. The trade continued to await details from Congress outlining requirements for the 45Z Clean Fuel Production Credit featured in the Inflation Reduction Act, which was set to start Jan. 1 and was expected to provide a tax credit for qualifying transportation fuel producers. The trade also was awaiting a decision from the Environmental Protection Agency (EPA) on its volume requirements for the Renewable Fuel Standard mandate. Concern in the trade for both programs grew after Trump appointed Lee Zeldin to lead the EPA.
“I would say that the initial reactions to the Trump administration appointing Lee Zeldin at the EPA is not flying too well.” said Brian Harris, executive director and co-owner of Global Risk Management. “He’s not been very friendly toward biofuels throughout his career. Obviously the Trump administration is going to be pro-big oil. That’s a given. However, that rivalry that existed four to six years ago between oil and biofuel, you have to remember that big oil is now biofuel. They have invested billions of dollars over the last couple of years to ramp up renewable biofuel infrastructure. So, it’s not such a tug of war between them anymore. So, big oil is going to have to walk a fine line. They’re going to want everything they can get from Trump, but not at the expense of trying to halt expansion of renewable diesel because they’ve got major investment in the industry.”
Despite all the uncertainty fueling volatility, Harris said he expects the soybean market to settle into a rangebound pattern between now and mid-January with values hovering between $9.75 and $10.25 per bushel. Harris said most of the volatility may likely be confined to the soybean oil portion of the complex as the fate of domestic policies comes into sharper focus.
Corn exports support prices
After dipping into sub-$4 per bushel territory in August, corn futures prices rebounded by more than 30¢ per bushel in September before retesting three-year lows in mid-October. Since then, driven by strong global demand, values again have been climbing, supported by a reduction in carryover and a steady export forecast in the USDA’s Nov. 8 WASDE report.
The USDA reduced its forecast for the carryover of corn on Sept. 1, 2025, to 1.938 billion bushels, 61 million bushels lower than the October projection. The USDA also lowered its 2024 US corn production estimate to 15.143 billion bushels, just under the October forecast, down 1% from 15.341 billion bushels in 2023 and the third highest on record. Based on Nov. 1 conditions, the crop was expected to average 183.1 bushels per acre, just below the previous month’s forecast but still record high.
The forecast for slightly lower carryover and production came alongside forecasts of steady corn use and exports in 2024-25. The USDA forecast feed and residual use of corn at 5.825 billion bushels, unchanged from October, and allocations for ethanol were 5.450 billion bushels, also unchanged from October and slightly lower than the year prior. The export forecast was 2.325 billion bushels, in line with the October projection and 33 million bushels higher than 2023-24.
“We saw a slight downtick in the yield in the November report, but we’re still looking at a very ample carryover,” Harris said. “The other side that has helped to stabilize the market in recent weeks has been a significant uptick in the demand side of the ledger, largely from Mexico. That’s prevented the market from sinking back to those August 2024 lows.”
Whether the surge in global demand will be short term or lasting, and how much it has been in reaction to the recent US presidential election result, will play a large role in determining where corn prices go in 2025, analysts cautioned.
“This doesn’t mean that corn has a bullish story going forward, but rather that when you reach multiyear lows, there’s a sense that perhaps the upside risk might be greater than the downside risk, so it’s a good time to get some coverage on,” said Arlan Suderman, chief commodities economist for StoneX.
Promises of renewed and increased tariffs from the incoming Trump administration could be bringing top corn importers to the table early, as they try to get ahead of threats of a trade war next year.
“Mexico is frontloading corn imports here — that’s certainly part of it,” Harris said, “and that’s why this surge in buying that we’ve seen in the final quarter of 2024 is likely to start slipping as the calendar rolls over.”
Meanwhile, in China, analysts are eyeing a range of possible scenarios in reaction to Trump’s return to the White House next year. While China could respond to new tariffs by shunning US corn and deepening its agreements with South American producers like Brazil and Argentina, other outcomes are possible.
“A different scenario would be a trade agreement with the Trump administration where China would buy more US corn and soybeans in exchange for reduced tariffs on goods coming into the United States,” Suderman said. “That would be something that could dynamically change the price outcome of corn to be much more bullish.”
On the supply side, analysts forecast US farmers will plant more corn in 2025, anywhere from 1.5 million to 2.3 million additional acres, adding to the nation’s already world-leading output. In South America, weather this winter and next spring could shape corn crops in Brazil and Argentina, with a weak La Niña pattern expected to bring drier-than-usual conditions, though so far, its effects have been limited.
Brazil, the world’s No. 2 corn exporter, already has received better-than-anticipated precipitation in recent weeks, “especially in center-west Brazil, which is the primary growing area for their winter corn crop,” Suderman said.
“At this point, it doesn’t look like La Niña is going to have a huge impact on Argentina’s corn output either,” Harris assessed.
A bigger issue for the world’s No. 3 corn exporter could be a growing epidemic of stunt disease spread by leafhoppers, Suderman said, noting that some estimates suggest Argentinian farmers could reduce corn area by as much as 20% for the 2025 crop, though he found that projection somewhat inflated.
“I do think we’re going to see corn production out of Argentina capped to some degree,” he explained. “We are seeing a shift away from corn toward soybeans there.”
Assuming these fundamentals carry forward, analysts said, US end users can expect corn prices in the range of $4.25 to $4.50 per bushel by mid-2025.
“Basis levels on corn have improved recently as people try to pry all this supply out of the farmer’s hand,” Harris said, “but futures aren’t going to play that game. They’ll be looking at overall supply, and for now the supply looks pretty healthy.”
